The European Court of Justice has given guidance on the issue of bonus pay
for staff on maternity leave. Law firm
Eversheds reports on this and a range of other employment law cases that have
recently come to judgement
Lewen v Denda, IDS Brief 649, European Court of Justice
Question of paying Christmas bonus while on parental leave
Lewen, who worked in Germany, claimed sex discrimination when her employer
refused to pay her a Christmas bonus while she was on parental leave.
Lewen’s maternity leave had ended in September 1996 and she then took
Her employer argued that the bonus was conditional on being in
"active" employment and refused to pay the 1996 bonus because of her
The ECJ held that the bonus constituted pay but non-payment was not directly
discriminatory because the policy applied equally to male and female staff and
was subject to the specific condition that the employee had to be in
"active" employment when it was awarded.
If, however, the bonus had constituted retrospective pay for work performed
in the year, non-payment would have been discriminatory as more females were
likely to take parental leave.
Parental leave was introduced in the UK on 15 December 1999 and bonus
policies should be reviewed to ensure there is no discrimination when payments
SBJ Stephenson Ltd v Mandy, unreported, High Court, December 1999
Breach of covenants can be costly
Mandy was an insurance broker with SBJ and was subject to non-solicitation
covenants. He resigned to go to Amilcroft and argued the covenants were
unenforceable because SBJ had been in breach by placing him on garden leave.
SBJ commenced injunction proceedings against Mandy in March 1999 (but not
Amilcroft) and on 30 April asked Amilcroft if it was funding his defence. There
was no response.
SBJ obtained the injunctions with costs awarded against Mandy but he had
become bankrupt. On the basis that Amilcroft had funded the defence SBJ wanted
an order for costs against it.
In fact Amilcroft had promised Mandy a loan to cover his costs thereby
enabling Mandy to defend the proceedings.
Amilcroft was ordered to pay half of SBJ’s costs from 30 April even though
it had not been party to the proceedings.
Carmichael and another v National Power, IRLR January 2000, House of
Importance of mutual obligations
Two individuals worked as guides on a "casual as required" basis.
There was an exchange of letters in relation to their appointment but when the
individuals applied to the tribunal for written particulars of employment they
The tribunal held they were not employees as there was no "mutuality of
obligation". While the individuals’ appeal to the EAT was unsuccessful,
their appeal to the Court of Appeal was allowed. National Power then appealed successfully
to the House of Lords where the tribunal’s decision was re-instated.
The significance of the case is that it examines when it is appropriate to
decide an individual’s employment status solely by construing an exchange of
letters – as the Court of Appeal had done – and when other evidence should also
be taken into account.
The House of Lords held that it was open to the tribunal in this case to
find that the parties did not intend the exchange of letters to be the sole record
of their agreement.
Merit pay and tupe
Unicorn Consultancy Services v Westbrook, IRLB 632, EAT
Liability for performance-related pay transfers with the business
Westbrook was employed by Atkins Services and benefited from a
performance-related pay scheme, the profit year for which ran from 1 April to
31 March. On 1 April 1997, Unicorn took over Atkins’ works contract with a
local authority and this was a relevant transfer for Tupe purposes.
The tribunal held that Unicorn had a liability to pay the
performance-related pay to the transferred staff, even though the scheme was
entered into before the transfer and the employees were not Atkins employees
when payment was due to be made.
Unicorn’s appeal to the Employment Appeal Tribunal was unsuccessful. It held
that the scheme’s purpose was to give eligible staff an element of pay linked
The employees transferred had earned their PRP because they had worked for
Atkins throughout its profit year and remained employed, even though not with
Atkins, at the time payment under the scheme was due. Unicorn was bound to pay
the PRP after the contracts of employment had been transferred .
Taylor v Commissioners of Inland Revenue, IDS Brief 649, EAT
Establishing the proper selection pool
Taylor was a valuation executive and while on maternity leave was graded 4
in an appraisal. This meant she was not suitable for promotion due to lack of
Before her return a scheme was introduced whereby valuation executives who
satisfied three criteria were promoted to senior valuer. Taylor met two of the
criteria but because she was not graded 2 in the most recent appraisal was not
promoted. The following year, after being graded 1, she sought retrospective
promotion but this was turned down.
She complained of indirect sex discrimination, arguing that but for her
absence she would have gained the necessary experience and promotion earlier.
The tribunal dismissed her claim and held the three criteria were indivisible
and the relevant "pool" was all the valuation executives. Of those
promoted there was no disproportionate impact on women.
Taylor successfully appealed and the EAT held the pool was those who could
comply with the same two criteria as Taylor and in those circumstances the impact
was disproportionate and fewer women were promoted.
Deduction of wages
Johnson v Hampshire Probation Service, Employment Lawyer 35, EAT
Does a car allowance constitute wages?
Johnson was classified an essential car user as he used his car for business.
As such he received a lump sum allowance and a mileage rate allowance. When he
was reclassified as a casual user he received only the mileage rate allowance.
He complained to the tribunal of an unlawful deduction of wages, arguing the
lump sum was an emolument rather than a payment in respect of expenses. His
complaint was unsuccessful.
Johnson appealed, also unsuccessfully. The EAT held that, even if the
employee might have profited from the payments, the allowances for the
essential car user were to compensate for expenses incurred in carrying out
The same applied to the allowance provided to a casual user. There was no
difference between the payments made under either classification. Accordingly
the payments were not emoluments and there was no unlawful deduction.
Khanum v IBC Vehicles, Employment Lawyer 34, EAT
Studying need not break chain of causation
Khanum was dismissed in December 1996 and in October 1997, having been
unable to find alternative employment, began a degree course. The tribunal
upheld her complaints of unfair dismissal and sex and race discrimination but
held that starting the course broke the chain of causation and compensation was
assessed only to that date.
Khanum’s appeal was upheld by the EAT. She had an apprenticeship with IBC
that would have led to a specialist job in an industry where IBC was dominant,
and there was evidence IBC was blacklisting her. It was reasonable to assume
that because of the dismissal, she would need to re-train to find alternative
work. The case was remitted to a tribunal to assess future losses, including
those arising after she started the degree course.
Everitt v British Telecommunications , IRLB 629, EAT
Accuser was within his rights
Everitt was dismissed for misconduct following his manager’s investigation
into his time-keeping. He pursued successful unfair dismissal and victimisation
The tribunal held that BT had carried out a thorough investigation and
genuinely believed Everitt was guilty of misconduct by falsifying his time
sheets. There was no evidence he had been victimised by the manager.
Everitt appealed, arguing that he should have had the opportunity to
question the manager. The EAT dismissed the appeal.
In deciding whether an employee has the right to question a person who makes
allegations against him or her, all the circumstances must be considered. In
this case, Everitt’s reason for questioning the manager was to establish his
motivation rather than the adequacy of the investigation. Providing Everitt was
aware of the allegations made against him and had an opportunity to respond, it
was not necessary for the manager to be available for questioning.
Mock v Commissioners of the Inland Revenue, IRLR 12, EAT
When time starts running for an appeal
Mock was unsuccessful in his tribunal claim and intended to appeal against
the decision. The EAT rules require that an appeal must be made within 42 days
from the date on which extended reasons for the decision were sent to the
parties. Mock’s appeal was presented a day late and he was not allowed to
He appealed, arguing that the time limit ran from the date he received the
extended reasons, and allowing for postal delivery his appeal was in time.
The EAT disagreed. Time started to run when the extended reasons were
transmitted to the parties. That was the date the tribunal decision was entered
in the register and the copy decision sent to the parties.